A tense stand-off on trade is happening between President Donald Trump of the United States and China. The President is looking to impose an additional $100 billion tariff on China in addition to the $50 billion that are already imposed on these tariffs. China is not pleased and they are looking to go tit-for-tat in this trade war.
China wasn’t pleased when President Trump first announced new tariffs on Chinese imports entering the United States. An additional $100 billion is no small number, but China responded quickly stating that they would have no hesitation paying any price necessary for them to defend their interests. China went on to state that as to major world powers, the two countries should treat each other with respect and equality, they believe that President Trump has picked the wrong target to mess with. While China has no interest in fighting, they do not fear a trade war with the United States. The risks of a trade war between these two countries would have massive global impacts. In Asia, the market showed no reaction to the trade spat while Hong Kong’s market rose roughly 1% and Japans market edged lower.
It all began when the US announced a 25% tax on steel and a 10% tax on aluminum. This affects multiple countries, but China was one of them. China, in response, imposed their own $3 billion tariffs on a range of goods the US imports including wine and pork. In return, the US then imposed about $50 million in tariffs on Chinese-made items which was met with $50 billion in Chinese tariffs on 106 different key US products. Now, the US is considering adding the additional $100 billion in tariffs as their next move.
It seems that the impact will be big and will affect many countries. At the moment, the Republican Party is cold to the tariffs fearing that it will cost many American jobs and hurt the economy as well as other trading partners. For example, the United States is a huge exporter of soybeans and China purchases 60% of those exports. The tariffs will cut down the need for those exports which will hurt American farmers and the American economy. China would then need a new supplier for the soybeans which would likely be from India who is a huge producer of the product. This would boost their economy greatly while the US suffers. Should China purchase from India or even Argentina or Brazil they would likely pay higher prices which would force the price of other products up causing a major inflation problem.
For now, a complaint from China has been lodged at the World Trade Organization (WHO) over the tariffs and it is scheduled to be heard in May. It could be months before any decision is made, but for now, it looks as though there could be some economic issues that arise as the two countries continue to disagree. For more details on this topic, click here.